Union Budget 2023: Focus on Welfare Schemes and Consumption Growth

The upcoming Union budget will emphasize welfare schemes to support consumption growth, particularly within the rural economy. Key focus areas will include employment programs, PM Awas Yojana, and agriculture. Despite increased welfare spending, the budget aims to reduce the fiscal deficit and incentivize bank deposits.

A domestic rating agency announced on Tuesday that the Union budget, set to be presented next week, will prioritize welfare schemes to boost sagging consumption growth.

The budget aims to increase allocation for the rural economy, welfare schemes, and agriculture to push consumption, according to Care Ratings.

The agency anticipates a Rs 75,000 crore rise in revenue expenditure for welfare schemes, compared to the interim budget.

Higher allocations are expected for employment guarantee programs, PM Awas Yojana, PM Gram Sadak Yojana, PM Kisan Samman Nidhi, and schemes for small businesses.

Despite higher welfare spending, the government plans to reduce the fiscal deficit target to 5% for FY25 from 5.1% in the interim budget.

With a wide gap between deposit and credit growth, the budget might incentivize deposit mobilization for banks.

The focus on capital expenditure will continue, with the government maintaining a Rs 11 lakh crore spending commitment.

The budget will also introduce more measures to support the productivity-linked incentives (PLI) scheme by increasing allocations or including more sectors like textiles, leather, and toys.

The agency also suggested focusing on significant divestments, which could raise up to Rs 11.5 lakh crore if the government retains a 51% stake in state-owned companies.

(With inputs from agencies.)